Q&A: Can a hobby ruin your budget?

I continue to be surprised and disappointed by the number of people I counsel who have difficulty controlling their spending. During the past several years I’ve encountered many people who spend a lot of money on hobbies and other interests, but can’t account for their spending and fall into financial problems.

My sister enjoys crafts and interior design, but was spending around $600 monthly online and at retail stores, as well as buying materials to fix vintage furniture.

READ: What's the best $20 you've ever spent?

A second woman I met recently at a conference in Arlington, Va., enjoys scrapbooking.

She spent $200 on a scrapbooking machine, another $50 for each individual chamber for the machine and hundreds of dollars monthly on designer paper and decorative scrapbooks.

It’s good to see people enjoy a hobby. The problem occurs when they spend money, but can’t account for these expenses in their budgets. That’s when they begin using credit cards, and they begin to slowly, but surely, pile up debt.

I’m a big believer in using a pocket tracker to manage expenses and set budgets. The tracker I helped develop is free and can be found at CredAbility.

If you track your spending closely, you should develop a budget that breaks down spending into these categories and percentages:

Housing – 38 percent. Food – 12 percent. Transportation, including insurance – 15 percent.

Insurance, clothing, medical, miscellaneous needs and savings – 5 percent each.

I also advocate spending 5 percent monthly toward credit cards and other debt. Finally, allocate 5 percent of your budget for recreation, which includes expenses dedicated to hobbies and entertainment.

READ: Why you can't seem to stay out of debt

Remember, however, that if an expected expense comes up, use the funds from the miscellaneous category to cover these costs. If your child has a field trip that cost $75 that you haven’t budgeted, don’t pull out the credit card. If you do, your budget will begin to fall apart. If you stay within your budget’s guidelines, soon you’ll find that your spending is under control.

Staying within the guidelines will really help get expenses under control. In my sister’s case, I worked with her to develop a budget that enables her to enjoy her hobby, but whittled her spending to $350 a month.

As her financial counselor, I knew that she could afford this amount and still enjoy her hobby. As her sister, I also recommended that she spend more time with family and find an activity to take her mind off spending. As a result, I’m seeing her more often and she’s riding her bicycle a few evenings each week. She’s getting new emotional and health benefits while also keeping her spending under control.

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